Friday, 7th June 2013 | The Jamaican dollar hit the dreaded $100 mark to the US dollar on Friday but Bank of Jamaica seems to have been the major buyer of the foreign funds as opposed to serious speculation of the local dollar. The central bank, in response to an ICInsider query, stated, “please note that Jamaica Dollar liquidity conditions were constrained during last week (3-7 June), given fairly strong subscriptions to the longer tenors of BOJ instruments on offer. In that context, several institutions sold USD to BOJ to shore up their Jamaica Dollar positions.”
Trading patterns seemed odd for the past two weeks as the dealers bought US$17 million more in the week ending May 31 but sold substantially more than they bought in the week ending on Friday, in a scenario that did not appear to be buying pressure even as the average selling rate slipped to hit J$100 to the US dollar on Friday.
In a market where demand was greater that supply, dealers would most likely be selling what they purchased and not much more as occurred during the current week. This suggested that they were switching from foreign currency holdings to local currency and this was supported by the presence of the two bonds that were on the market with that objective in mind. The bonds that were put out by Bank of Jamaica was to tighten Jamaican dollar liquidity and pump more foreign currencies into the central bank coffers closed on Friday.
Dealers bought US$24.65 million on Friday and sold $37.97 million, they bought GBP2.35 million and sold GBP800,986 and sold C$866,000 while buying C$1.25 million.
